The Center's work on 'Process' Issues

Here’s Our Take on the House’s Low-Income Cuts

May 11, 2012 at 4:52 pm

News stories (like this and this) and commentaries (like this) offer differing numbers on how the House-passed budget legislation of yesterday would affect programs for low-income Americans.  We’ve said the legislation achieves 42 percent of its savings from “assistance targeted to low- and moderate-income Americans.”

With various numbers floating around, we thought it would be useful to show you how we got our figure, which is based on estimates from the Congressional Budget Office (CBO).

CBO says the legislation would achieve $309 billion in savings from mandatory programs over the next ten years. Some 42 percent would come from programs like SNAP (formerly known as food stamps), Medicaid, and CHIP (the Children’s Health Insurance Program), and from social services for vulnerable children and elderly and disabled people.

Here’s how we got the figure:

  • $35.8 billion (or 11.6 percent of total mandatory savings) from SNAP, eliminating 2 million people from the program and cutting benefits for 44 million others.
  • $31.9 billion (or 10.3 percent) from scaling back the support that many people with incomes too low to owe federal income tax would receive under health reform to help them buy insurance in the new health insurance exchanges; this reduction would cause an estimated 350,000 people to forgo coverage.
  • $12.7 billion (or 4.1 percent) from reducing the number of low- and moderate-income uninsured people who would receive help buying coverage through the health insurance exchanges.  The legislation would eliminate federal grants to help states set up the exchanges, which CBO estimates would delay the establishment of some exchanges and, so, deny some low-income uninsured persons the opportunity to immediately buy subsidized coverage through them.  CBO estimates $14.1 billion in outlay reductions from this proposal, but we do not count as a low-income program cut the $1.4 billion of this amount that reflects lost grants to states — just the remaining $12.7 billion, which reflects lost health insurance subsidies for the uninsured.
  • $23.5 billion (or 7.6 percent) from Medicaid and CHIP.
  • $16.7 billion (or 5.4 percent) from terminating the Social Services Block Grant (SSBG), which states use to provide social services such as home-delivered meals for the elderly and child day care assistance; SSBG overwhelmingly supports services for low- and moderate-income families and individuals and focuses on lower-income communities.
  • $7.6 billion (or 2.5 percent) from reducing the number of people with incomes too low to owe federal income tax who claim the refundable part of the Child Tax Credit.  The legislation would require filers claiming the refundable part of the credit (but not the non-refundable part, which goes to filers with somewhat higher incomes) to provide their Social Security number.

The low-income cuts listed above total $128 billion, or 42 percent of total savings in mandatory programs in the House-passed bill.

Budget Bill Would Break Deal, Cut Programs for Vulnerable Americans

May 10, 2012 at 12:09 pm

The House is scheduled to vote today on legislation that would alter the bipartisan deal between President Obama and congressional leaders that was reflected in last summer’s Budget Control Act (BCA) by eliminating the “sequestration” (automatic cuts) in discretionary programs scheduled for 2013, and replacing it with a package that is strikingly unbalanced in how it affects different parts of the budget and, in particular, programs for low- and moderate-income people.

Last week, the Center issued an overview of the proposal, and we took a closer look at the effects of canceling the sequestration for 2013.

We’ve also recently issued reports examining the cuts the bill would make to critical domestic programs:

  • SNAP. The proposed cuts to the Supplemental Nutrition Assistance Program (formerly known as food stamps) would reduce or eliminate benefits for all SNAP households, including the poorest.
  • Social services. The bill would terminate the Social Services Block Grant, a uniquely flexible funding source that helps states meet the specialized needs of their most vulnerable populations, primarily low- and moderate-income children and people who are elderly or disabled.
  • Health insurance. The legislation includes a change in the Affordable Care Act’s subsidies that would cause 350,000 people to forgo coverage and make it more difficult for the health reform law’s insurance exchanges to function effectively.

House Budget Committee Votes to Break Budget Deal

May 8, 2012 at 5:02 pm

The House Budget Committee approved legislation yesterday that would alter last summer’s bipartisan budget deal and enable Congress to set defense funding above the agreed-upon cap, while cutting deeply into various non-defense programs, particularly those for lower-income families, as we explain in two new reports.

Our first report gives the big picture:

The House Budget Committee approved on May 7 a package of two bills that would alter the bipartisan deal between President Obama and congressional leaders that was reflected in last summer’s Budget Control Act (BCA).  It would eliminate the “sequestration” (automatic cuts) in discretionary programs scheduled for 2013 as a result of the failure of the Joint Select Committee on Deficit Reduction (the “supercommittee”) to achieve $1.2 trillion in deficit reduction, and replace it with a package that is strikingly unbalanced in how it affects different parts of the budget and, in particular, programs for low- and moderate-income people.

Our second report takes a closer look at the proposal to cancel the discretionary sequestration scheduled for 2013 while merging and reducing the existing discretionary funding caps.  As the graph shows, the bill would accommodate the Ryan budget plan to cut non-defense discretionary funding for 2013 nearly as deeply as if sequestration remained in place, while boosting defense funding above the level that the Budget Control Act sets.

House Budget Committee Votes to Break Budget Deal

Vote to Eliminate SSBG Program for Vulnerable People Continues Disturbing Pattern

May 4, 2012 at 11:43 am

The House Budget Committee will consider a package of budget cuts next week that includes eliminating the Social Services Block Grant (SSBG).  The Ways and Means Committee voted last month to eliminate the $1.7 billion-a-year program, which states use to help fund specialized services to some of their most vulnerable populations, primarily low- and moderate-income children and the elderly and disabled.

As our new paper explains, eliminating the SSBG is unjustified on its own terms and particularly troubling in the context of other cuts the House is considering.

The SSBG supports services designed to help people become more self-sufficient, prevent and address child abuse, and support community-based care for the elderly and disabled.  For example, roughly a quarter of SSBG funds help vulnerable and elderly adults, such as through day care services to help elderly adults continue living in their own homes and protective services to address abuse and exploitation of older adults.

Although the SSBG has received bipartisan support from governors and members of Congress, funding has already fallen 77 percent since 1981 due to inflation, funding freezes, and budget cuts (see graph).  That’s made it much harder over time for states to continue the services it supports.

Contrary to recent claims that the SSBG duplicates other federal programs, states use it to provide services for which there is no dedicated funding stream or where funding is inadequate.  Child care assistance is a good example:  despite the various funding streams used to support it, only one in six low-income working families eligible for federally supported child care assistance actually receives it.  Eliminating the SSBG would worsen that shortage.

It’s also worth noting that the Government Accountability Office (GAO)’s recent comprehensive survey of duplication and overlap in the federal government makes no mention of any duplication related to the SSBG.

The effort to eliminate the SSBG is part of a disturbing pattern.  As our report explains:

Voting to eliminate the SSBG continues a troubling recent trend in the House of cutting or eliminating programs that help vulnerable people.  The House budget requires the Ways and Means Committee to find $53 billion in savings over ten years.  The Committee has the tax code within its jurisdiction, including about $1 trillion a year in tax expenditures, many of which are heavily weighted toward upper-income households.  Yet it chose not to obtain any of its required savings by narrowing tax breaks, regardless of their merits.  Instead, it found $68.2 billion in cuts — more than the required savings — exclusively from programs designed to help low-income, uninsured, and otherwise vulnerable people.

We’ll provide more analysis of the proposed House cuts next week.

Thinking About Tax Policy, Part 4: Ryan Plan a Costly Step in the Wrong Direction

April 13, 2012 at 2:18 pm

This series has explained why we need to raise more revenue and why it makes sense to start at the top of the income scale.  The budget from House Budget Committee Chairman Paul Ryan goes in exactly the opposite direction — it would cut taxes deeply at the top and raise even less revenue than if we continued all of President Bush’s tax cuts, leading to bigger deficits and worse income inequality.

Top 1 Percent Would Receive Nearly Half of Ryan Tax Cuts

The Ryan budget would permanently extend President Bush’s tax cuts, which policymakers enacted when the federal government had a large budget surplus and which have since proven unaffordable.  That would cost more than $4 trillion over the first decade alone.

Next, Chairman Ryan would dig the budget hole even deeper with new tax cuts that would cost $4.5 trillion over the first decade (according to the Urban-Brookings Tax Policy Center); he has said he would pay for them by broadening the tax base but hasn’t offered any proposals.  The tax cuts would overwhelmingly flow to the richest people in the country:

  • People with incomes above $1 million would receive a $265,000 average annual tax cut, on top of the $129,000 they would receive from extending the Bush tax cuts.  Their after-tax incomes would rise by 12.5 percent, on average — seven times more than the 1.8 percent average gain for middle-income households.
  • The top 1 percent of taxpayers — those with incomes above $630,000 — would receive 45 percent of the new tax cuts, or nearly as much as the rest of the entire population (see graph).
  • Low-income working families would actually be hit with tax increases because the Ryan plan wouldn’t fully extend President Obama’s tax cuts for working-poor households. People with incomes below $10,000 would see their after-tax incomes fall by 2 percent, on average.